A congressional hearing on federal onshore oil and gas leasing highlighted the political tensions and economic worries but may not have gone far in clarifying or resolving them.
Watch an archived video of the hearing
Several lawmakers at the Apr. 27 hearing of the Senate Energy and Natural Resources Committee tried to get a better sense of whether President Biden’s indefinite moratorium on new lease sales is accompanied by an official or unofficial slowing down if not blocking of permits for existing leases. They also heard that the leasing pause, by itself, is hurting state revenues and jobs.
Nada Culver, deputy director of policy and programs for the Bureau of Land Management (BLM), testified that the leasing moratorium does not affect work on existing leases. Culver, a former attorney for the National Audubon Society and the Wilderness Society, also said the leasing halt is not going to have a significant impact in the near future.
She was unwilling to specify the time period for “near future,” and she said she could not offer a specific time length for the moratorium.
Gov. Mark Gordon (R) of Wyoming, another witness, was not happy about how permitting has been going since President Biden took office and issued his Jan. 20 executive order suspending federal leasing for oil and gas. The leasing moratorium is hurting employment and revenues in his state, and, at the same time, permitting is not functioning well, he said.
“Contrary to what has been said here,” there has been a very uneven application of permitting authority, Gordon said.
Permitting slowdowns?
Sens. John Barrasso (R-Wyo.) and James Lankford (R-Okla.) cited a Mar. 19 Interior memo that cautioned professional staff in offices and bureaus to avoid making decisions without first allowing an assistant secretary—a political appointee—a chance for review.
Culver said that was a reversion to a policy practiced by previous administrations, not a new bureaucratic layer in permitting decisions. Lankford then asked another witness, Vicki Hollub, president and chief executive officer of Occidental Petroleum Corp., if that sounded correct.
Hollub said 300 lease extension requests were sent to Interior from oil and gas companies a few days after that Mar. 19 memo, and no action appears to have been taken on them. The extension requests “would have been pretty typical in the past,” she said. Interior policy on handling such requests appears to be different now, she said.
Sen. Lisa Murkowski (R-Ala.) expressed her concerns about BLM regulatory delays at the Willow project of ConocoPhillips Co. on the North Slope of Alaska in the National Petroleum Reserve-Alaska. A pause of Willow regulatory activity has been in effect for 100 days, Murkowski said, referring to the days since Biden took office Jan. 20.
The Willow project is past leasing and into the permitting phase.
Another witness, Kathleen Sgamma, president of Western Energy Alliance, said the chilling effect of the leasing moratorium and other regulatory burdens cause oil and gas activity to migrate away from federal lands, which in some cases means leaving a state.
A matter of significance
Culver’s testimony included numbers on oil and gas operations. About 7% of US oil production and 8% of US natural gas production comes from federal onshore lands. In fiscal year 2020, those operations produced $2.3 billion in royalties, $93 million in bonus bids, and $23 million in rents.
Culver noted that revenues for state and local governments come from the royalties and rents on existing leases. Only the bonus bids in lease sales are blocked by the moratorium on new leases.
Gordon indicated he did not consider those bonus bids insignificant, especially in a state like Wyoming, where 48% of the surface acreage is federally owned, and 68% of the subsurface mineral acreage is federally owned.
“And all of this seems completely unnecessary,” the governor said, referring to the moratorium. “Any comprehensive, thoughtful, diligent and meaningful review could be done without stopping the entire leasing program.”
